Adjusted net income

What is Adjusted Net Income? How do I calculate it? Why is it important?

This is a freeview 'At a glance' guide to Adjusted Net Income, what is it and why it is relevant.

At a glance

Taxpayers are required to work out their 'Adjusted Net Income' in order to calculate:

Their Personal savings allowance.
Whether the High-Income Child Benefit Charge applies.
The income-related reduction to the Personal allowance for any taxpayer who has adjusted net income over £100,000.

Your adjusted net income for a tax year is determined as follows:

Step 1: Take your net income for the year, which is your total taxable income including employment income, self-employed income net of trade losses, rental and investment income, and other taxable benefits etc, less any pension contributions that are paid gross.
Step 2: Deduct the grossed-up amount of any gift made under Gift Aid.
Step 3. Deduct the grossed-up amount of pension contributions paid in accordance with s.192 FA 2004 (where your pension provider has already given you relief at the basic rate).
Step 4. Add back any relief under section 457 or 458 (payments to trade unions or police organisations) that was deducted in calculating the individual’s net income for the tax year.

Adjusted Net Income is calculated slightly differently from Relevant Earnings for pension purposes.

Adjusted Net Income Calculator

Use this calculator to estimate your Adjusted Net Income.

What do I enter?

Enter your gross taxable income or allowable loss and any payments made before any allowances are claimed.
Enter Gift Aid payments if you are an Income Tax payer and have made a payment to charity and completed a Gift Aid declaration.